Deutsche Wohnen Se · XETR:DWNI

Deutsche Wohnen — FY2018 Earnings Presentation

41 slides from Deutsche Wohnen's earnings presentation, Mar 26, 2019

  1. Slide 1: Full Year Results 2018

    Deutsche Wohnen SE Full Year Results 2018 Conference Call 26 March 2019

  2. Slide 2: Agenda

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Agenda 01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix deutsche-wohnen.com 2

  3. Slide 3: Highlights FY 2018

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Highlights FY 2018 Operating business continues to be strong  L-f-l rental growth at 3.4% (Berlin at 3.6%), 2018 guidance beat (3%)  Average gross margin of disposal business almost 40%  +15% yoy increase in Earnings from

  4. Slide 4: Reversionary potential continues to be high

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Reversionary potential continues to be high Reversionary % of total Multiple Multiple Residential units In-place rent1 Fair value potential2 Vacancy Strategic cluster (measured by in-place rent re-letting rent (#) (EUR/sqm/m

  5. Slide 5: Like-for-like development above 3% guidance

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Like-for-like development above 3% guidance 1 1 Residential In-place rent In-place rent Vacancy Vacancy Like-for-like Change Change units 31/12/2018 31/12/2017 31/12/2018 31/12/2017 31/12/2018 (y-o-y) (y-o-y) (#) (EUR/sqm/mo

  6. Slide 6: Total value uplift of EUR 2.2bn, 11% capital growth on a lfl basis

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Total value uplift of EUR 2.2bn, 11% capital growth on a lfl basis, including capitalized investments even >13% Components of valuation uplift (EUR bn) Uplift by clusters % 2018 2017 Change of Fair Value Fair Value in 2.2 Fa

  7. Slide 7: Berlin still screens relatively attractive

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Berlin still screens relatively attractive CBRE asking rents F&B in-place rents Reversionary potential (EUR/sqm) (EUR/sqm) Munich 17.00 Munich 10.45 München 63% Frankfurt (Main) 13.38 Stuttgart 9.97 Frankfurt (Main) 59% Stut

  8. Slide 8: Size matters – below average apartment size is an affordability advantage

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Size matters – Deutsche Wohnen’s below average apartment size is a clear affordability advantage Affordability of average Deutsche Wohnen flat in Berlin Housing cost ratio DW In-place DW re-letting Market rent2 Housing cost

  9. Slide 9: Supply demand imbalance expected to widen further

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Supply demand imbalance expected to widen further Why is new construction not picking up1? Expected completions will not meet demand1 (#k apartments)  Long planning phases: Approval processes take too long - Average length

  10. Slide 10: Bolt-on acquisition in West German metropolitan regions

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Bolt-on acquisition in West German metropolitan regions Regional split  2,850 residential units Object of purchase  100 commercial units 3% 11% Acquisition price  EUR 685m Rhine-Main Net cold rent  EUR 22m p.a. 39% regio

  11. Slide 11: Ongoing investments into the portfolio

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Ongoing investments into the portfolio FY-2018 FY-2017 Refurbishment & Maintenance per sqm EUR / EUR / EUR m EUR m 24.92 33.37 41.05 ~ 40.00 sqm1 sqm1 Maintenance (expensed 102.9 10.14 104.7 10.52 30.91 ~ 30 through p&l) 22.

  12. Slide 12: Strong letting business leading to improved NOI margin

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Strong letting business leading to improved NOI margin in EUR m FY-2018 FY-2017 Income from rents (rental income) 785.5 744.2 Income relating to utility/ ancillary costs 337.4 326.5 Maintenance expenses as a percentage of re

  13. Slide 13: Attractive margins of disposal business despite revaluations

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Attractive margins of disposal business despite revaluations Disposals Privatization Institutional sales Total with closing in FY-2018 FY-2017 FY-2018 FY-2017 FY-2018 FY-2017 No. of units 374 707 1,597 2,142 1,971 2,849 Proc

  14. Slide 14: Increasing EBITDA contribution from Nursing business

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Increasing EBITDA contribution from Nursing business Operations (in EUR m) FY-2018 FY-2017 Total income 98.8 93.4 in EUR m FY-2018 FY-2017 Total expenses (92.3) (86.2) Nursing & Assisted Living 85.2 81.1 EBITDA operations 6.

  15. Slide 15: Increasing adj. EBITDA margin despite higher corporate expenses

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Increasing adj. EBITDA margin despite higher corporate expenses in EUR m FY-2018 FY-2017 Development of cost ratio Earnings from Residential Property Management 656.2 612.8 11.9% Earnings from Disposals 43.1 50.3 10.9% Earni

  16. Slide 16: FFO I per share growth of 10% yoy to EUR 1.35

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix FFO I per share growth of 10% yoy to EUR 1.35 in EUR m FY-2018 FY-2017 EBITDA (adjusted) 662.0 624.3 FFO I margin development1 Earnings from Disposals (43.1) (50.3) 61.4% 60.1% Long-term remuneration component (share based)

  17. Slide 17: Strong capital growth reflected in EPRA NAV per share, up 18%

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Strong capital growth reflected in EPRA NAV per share, up 18% in EUR m 31/12/2018 31/12/2017 Equity (before non-controlling interests) 11,559.1 9,888.2 EPRA NAV per share (undiluted) in EUR Fair values of derivative financia

  18. Slide 18: Strong generation of total shareholder return

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Strong generation of total shareholder return Development of dividend in EUR per share Development of EPRA NAV (undiluted) in EUR per share CAGR 2014-2018: +18% CAGR 2014-2018: +24% +18% +9% +8% +20% +37% 42.26 0.87 0.80 +29

  19. Slide 19: Conservative long-term capital structure

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Conservative long-term capital structure Rating A- / A3; stable outlook Ø maturity ~ 7.8 years  Low leverage, long maturities and strong rating % secured bank debt 69%  Flexible financing approach to optimize financing cos

  20. Slide 20: Overdelivery on guidance 2018 and outlook for 2019

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Overdelivery on guidance 2018 and outlook for 2019 FY 2018 FY 2019 479.4  Approximately EUR 535m1 (+12% yoy) FFO I 475.5  Unchanged dividend payout ratio of 65% of FFO 1 (EUR m) Guidance Delivery  EUR 0.87 per share sugge

  21. Slide 21: Appendix

    Appendix

  22. Slide 22: Strong like-for-like development as of 31 December 2018

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Strong like-for-like development as of 31 December 2018 2 2 Residential In-place rent In-place rent Vacancy Vacancy Like-for-like Change Change units 31/12/2018 31/12/2017 31/12/2018 31/12/2017 31/12/2018 (y-o-y) (y-o-y) (#)

  23. Slide 23: Attractive spread between in-place and re-letting rent multiples

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Attractive spread between in-place and re-letting rent multiples offer further potential for NAV growth FV FV Multiple Multiple Residential units Multiple Regions 31/12/2018 31/12/2018 in-place rent re-letting rent (#) sprea

  24. Slide 24: Portfolio structure – characteristics meeting strong demand

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Portfolio structure – characteristics meeting strong demand Apartment size (Ø 60 sqm) Year of construction Rental restrictions In-place rent (expiring over time) (Ø 6.62 EUR/sqm/month) 30.4% 29.4% 30.0% 29.8% 11% ~9% 18% 18%

  25. Slide 25: Deutsche Wohnen's residential portfolio is best-in-class

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Deutsche Wohnen's residential portfolio is best-in-class Siemensstadt, Berlin Hellersdorf, Berlin Carl-Legien-Siedlung, Berlin Südwestkorso, Berlin Oranienkiez, Berlin Hufeisensiedlung, Berlin Dresden Otto-Suhr-Siedlung, Ber

  26. Slide 26: The Berlin portfolio at a glance

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix The Berlin portfolio at a glance Pankow Reinickendorf # 9,842 | 2.5% # 9,715 | 1.0% EUR 7.31 | EUR 3,009 EUR 6.70 | EUR 2,339 Lichtenberg Mitte # 8,803 | 0.9% # 4,554 | 1.9% EUR 6.54 | EUR 2,501 EUR 7.13 | EUR 2,652 Friedric

  27. Slide 27: Berlin valuation overview

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Berlin valuation overview Hot Spot Stable City centre & Growth As of 31/12/2018 Big outskirt Total Berlin wealthy City-edge areas settlements southwest Residential units1) 36,064 46,650 28,837 111,551 Share in FV 38.0% 40.2%

  28. Slide 28: Berlin – The place to be!

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Berlin – The place to be! Government Industry Innovation High-tech Tourism Science 2nd best • 6,500 technology Seat of parliament, Siemens signed biggest performing European firms Around 13.5 million Highest density of gover

  29. Slide 29: Excellent macro trends in Berlin

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Excellent macro trends in Berlin GDP growth in Berlin outpaces Germany Real wage index with strong growth in Berlin 4.4 3.1% 3.2% 3.2% 2.7% 2.7 2.4 2.2% 2.3% 2.2% 2.2% 1.9 2.0 1.7% 1.5% 1.8 1.2 0.8 2014 2015 2016 2017 2018 2

  30. Slide 30: Berlin – Historical rent index development on average 5-6%

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Berlin – Historical rent index development on average 5-6% Key facts Historical development of Berlin rent index EUR/sqm Growth in 2y  93% of all metropolitan areas in Germany have a rent index 7.00 9.4% 10% 9%  Next rent

  31. Slide 31: Ownership structure of residential real estate in Germany and Berlin

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Ownership structure of residential real estate in Germany and Berlin # of appartments: 21.2m Private individuals and community of Professional landlords apartment owners 34% 66% Germany  Ownership structure of residential r

  32. Slide 32: Dynamic transaction market

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Dynamic transaction market Transaction volume in German Residential (EUR bn) Development of rents in Berlin (EUR/sqm/month) Volume in bn Units sold +5% +6% +9% 30 400,000 361,000 9.00 9.83 10.34 8.53 25 300,000 2015 2016 201

  33. Slide 33: Re-letting rents continue to outpace in-place rents

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Re-letting rents continue to outpace in-place rents DW rent development in Greater Berlin DW development of multiples in Greater Berlin EUR / sqm 35.0x 29.9x 9.08 30.0x 27.1x 9.00 8.47 23.7x 25.0x 7.9x spread 8.00 7.60 35% 1

  34. Slide 34: Current level of rents and prices in TOP 7 German cities

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Current level of rents and prices in TOP 7 German cities Asking prices multifamily housing (in EUR / sqm)1 Development of rents (EUR/sqm/month)1 DW Greater Berlin DW Greater Berlin (book value) 2,404 (re-letting rent) 9.08 C

  35. Slide 35: Disposals business remains opportunistic

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Disposals business remains opportunistic Development of privatization business Development of institutional sales business 44% 41% 39% 30% 41% 20% 8% 13% 20% 37% 20,000 95% 93% 92% 2,444 15,000 91% 91% 16,408 90% 14,811 2,08

  36. Slide 36: Bridge from adjusted EBITDA to profit

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Bridge from adjusted EBITDA to profit in EUR m FY-2018 FY-2017 EBITDA (adjusted) 662.0 624.3 in EUR m 2018 2017 Depreciation (9.6) (7.4) Interest expenses (106.3) (100.2) At equity valuation 2.6 3.0 In % of gross rents ~14%

  37. Slide 37: Summary balance sheet

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Summary balance sheet Assets Equity and Liabilities in EUR m 31/12/2018 31/12/2017 in EUR m 31/12/2018 31/12/2017 Investment properties 23,781.7 19,628.4 Total equity 11,908.1 10,211.0 Other non-current assets 291.2 134.4 Fi

  38. Slide 38: Management board and areas of responsibilities

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Management board and areas of responsibilities Michael Zahn Philip Grosse Lars Wittan Lars Urbansky Chief Executive Officer Chief Financial Officer Chief Operating Officer Succeeding Chief Operating Officer (appointed until

  39. Slide 39: Executive Board compensation system – as of 1 January 2018

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Executive Board compensation system – as of 1 January 2018 1 Introduction of Share Ownership Guidelines (SOGs) 2 Conversion of the Stock Option Plan into a Performance Cash Plan Reduction of the plan’s complexity and meeting

  40. Slide 40: Disclaimer

    Disclaimer This presentation contains forward-looking statements including assumptions, opinions and views of Deutsche Wohnen or quoted from third party sources. Various known and unknown risks, uncertainties and other factors could cause actual results, financial positions, the development or the p

  41. Slide 41: Deutsche Wohnen SE

    Deutsche Wohnen SE Mecklenburgische Straße 57 14197 Berlin Phone +49 30 89786-5413 Fax +49 30 89786-5419 © 2019 Deutsche Wohnen Gruppe

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